Financial Conduct Authority  

FCA criticised for 'not knowing' its own rules

"There’d be carnage, the courts would be overflowing, and the lawyers as usual would be the only winners."

Mr Liversidge said he still did not know the answer to his question.

Alistair Cunningham, financial planning director at Wingate Financial Planning, said he was not surprised as the regulator tended to take the view that it was not for them to explain the rules.

He added: "The FCA creates the framework and does what it thinks is right and sometimes the rules are open to interpretation, like in the defined benefit world."

But Mr Cunningham went on to say that it was surprising the regulator had admitted it was "too complex" as "someone in the FCA surely knows" the answer.

Paul Stocks, financial services director at Dobson & Hodge, thought this demonstrated how vague and complex regulation could be.

He said: "As a smaller firm, there’s a lot of regulation that’s not black and white and, in a regulatory environment, that makes me nervous.

"There could be accidental harm to the client, firms with good intentions could make mistakes thinking they were doing a regulatory-safe move and firms with bad intentions can make the most of the grey and look to exploit consumers.

"From the FCA’s point of view, this should have been a yes or no answer. It should not be this complex."

Darren Cooke, chartered financial planner at Red Circle Financial Planning, said it was "an absolute joke" that the regulator couldn’t explain its own rules and that he was "quite disappointed but not surprised" by it.

He added: "This is a serious problem and demonstrates how ridiculous some rules can be.

"These are the rules the FCA is supposed to enforce, and they cannot explain it themselves. It’s really not good enough."

A spokesperson from adviser trade body Pimfa said: "Pimfa believes this is not a proportionate response that a small firm would need to seek legal advice. The issue raised requires a further, more considered response from FCA."

Pimfa attempted to clarify the issue but was not able to.

FTAdviser contacted several compliance consultants to establish an answer to Mr Liversidge’s question, but was not able to.

The FCA declined to comment.

imogen.tew@ft.com

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